First-Time Buyers Bolster Gun Makers, Retailers

Firearms have been flying off shelves across the country amid calls from some lawmakers to increase gun control, and manufacturers are benefiting from the surge in demand.

But retailers and makers of firearms aren’t simply relying on returning gun owners looking to make another purchase. They’re also getting a boost from first-time buyers, thanks to an increasing number of people interested in firearms.

Firearms sales have soared recently amid concerns over increased regulations. Some states, including New York and Connecticut, have passed stricter laws that ban certain firearms and cap magazine capacities in the wake of last year’s school shooting in Newtown, Conn. The U.S. Senate struck down an effort to pass gun-control legislation related to background checks and a ban on some semi-automatic rifles.

On Thursday, Smith & Wesson (SWHC) said it expects fourth-quarter results to surpass previous expectations, now calling for a 38% increase in sales compared to the year-ago period. Sturm, Ruger & Co. (RGR) reported first-quarter earnings in April, saying its profit raced 53% higher and sales were up 39%.

Popular hunting and outdoor retailer Cabela’s (CAB) has also reported a significant benefit from firearm sales. Same-store sales climbed 24% in the first quarter but were up 9% excluding firearm sales.

KeyBanc Capital Markets analyst Scott Hamann said Thursday in a research note to clients that despite Smith & Wesson’s rosier outlook, “we believe the results are not entirely surprising given the heightened level of political rhetoric during the quarter (culminating with a failed Senate vote on gun control on April 17) combined with significant restocking requirements in the depleted retail channel.”

For now, manufacturers and retailers are enjoying the extra business, especially from those who are new to firearms.

In its annual Firearms Retailer Survey Report, the National Shooting Sports Foundation said there is an upward trend in the number of first-time buyers purchasing firearms, while more women are frequenting gun shops and ranges.

“There’s no question that the number of people becoming interested in owning firearms for personal protection or shooting sports is growing,” said Mike Bazinet, Director of Public Affairs at the NSSF.

Retailers surveyed by the NSSF, a trade association for the firearms industry, reported that 25.8% of their customers were first-time firearm buyers in 2012. That reflects a slight improvement over the prior year’s 25% but a large jump from 20.8% in 2010.

And it hasn’t been a recent phenomenon, although recent sales show acceleration in the number of newcomers. Bazinet noted that background checks through the FBI’s National Instant Criminal Background Check System—the industry’s best gauge of overall demand—have been on the upswing for more than a decade.

Background checks have soared in recent years, and this year is on pace to be the strongest. January set a monthly record with nearly 2.5 million background checks, while checks eased a bit in April and May. Over the first five months of the year, more than 10.1 million background checks have gone through the system, compared to 19.5 million in all of 2012.

“A lot of people have said that fewer people are buying more guns. That’s certainly not the experience our retailers are reporting or what we see in the NICS checks,” Bazinet said, adding that gun ranges are busier than ever.

Mark Malkowski, President and CEO of Connecticut-based Stag Arms, said his company has seen a “big increase in first-time buyers” during the last five years or so. He added that AR-15 rifles, which Stag Arms manufactures, are “turning into a staple” for those starting a collection of firearms.

“It’s one of those rifles that you have to have,” he said.

And next week, Stag Arms expects to begin shipping a rimfire version of its AR-15 in Connecticut, after the state passed a ban on semi-automatic rifles that covered centerfire rifles.

Bazinet also noted that retailers are doing more to expand their services, such as holding training programs and events for female shooters. Social media has also given firearms enthusiasts an easy way to share their experiences at the range or purchasing a firearm.

The NSSF survey show that, for the third year in a row, the number of female customers continued to rise. For 2012, 78.6% of retailers said more women came to their stores versus the prior year, compared to 72.8% in 2011 and just 61.1% in 2010.

According to Malkowski, after seeing traditionally low participation from the demographic, the company is “seeing a swing” to the upside.

Bazinet said the NSSF has found that women, right from the start, are better shots than men who are new to firearms. Women are less likely to have preconceived notions about shooting technique, while men may be tempted to do their best imitation of Michael Westen from “Burn Notice.”

“They don’t make the same mistakes men do just because they saw someone shoot in a movie,” he said.

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U.S. stocks declined on Tuesday in a retreat from the previous session's sharp rally, but major indexes remained on track for first-quarter gains and the S&P 500 was set for its ninth straight quarterly rise.